《Offshoring and the Role of Trade Agreements》.pdf

Offshoring and the Role of Trade Agreements∗ Pol Antràs Robert W. Staiger Harvard University and NBER Stanford University and NBER September 9, 2011 Abstract The rise of offshoring of intermediate inputs raises important questions for commercial policy. Do the distinguishing features of offshoring introduce novel reasons for trade policy intervention? Does offshoring create new problems of global policy cooperation whose solutions require inter- national agreements with novel features? In this paper we provide answers to these questions, and thereby initiate the study of trade agreements in the presence of offshoring. We argue that the rise of offshoring will make it increasingly difficult for governments to rely on traditional GATT/WTO concepts and rules — such as market access, reciprocity and non-discrimination — to solve their trade-related problems. ∗This paper has benefited from the very helpful comments of the Editor and three anonymous referees. We also thank Costas Arkolakis, Kyle Bagwell, Meredith Crowley, Elhanan Helpman, Nuno Limao, Giovanni Maggi, Michele Ruta, Kjetil Storesletten, Alan Sykes, and seminar participants at Clemson, Northwestern, Stanford, Virginia, Yale, the NBER ITI Winter Meeting and the WTO and International Trade Research Conference at Brandeis University for helpful comments and discussions. Staiger gratefully acknowledges financial support from the NSF (SES-0518802). Eduardo Morales provided superb research assistance. The online Appendix mentioned in the text is available at: /faculty/antras/files/Antras_Staiger_Online_Appendix.pdf 1 Introduction International trade in intermediate inputs is a prominent feat